Skip to main content

tv   Book TV After Words  CSPAN  January 9, 2011 9:00pm-10:00pm EST

9:00 pm
pilgrimage. i get to go home at least once a year taking groups with me on a pilgrimage. >> co-author of made forgiveness and why this makes all the difference. her co-author is the red this delete curfman desmond tutu coming up next, book tv presents langston, an hourlong program where we invite guest hosts to interview authors. this week, "new york times" editorial board member eduardo porter discuss is the mystery of why people are willing to pay what they do for the things that are important to their lives. in his latest book, "the price of everything," the former wall street journal writer argues goods and services are not the only thing for the cost. decisions also have a price, he says, and those costs shape our everyday lives.
9:01 pm
mr. porter discusses "the price of everything" with yahoo! economics finance editor daniel gross. >> host: eduardo porter, your new book is entitled "the price of everything and solving the mystery of why we pay what we do." investor's with i think an interesting premise. so much as economics relies on the concept of a natural actor. people do think what makes economic sense to them the way the costs and benefits, compare and contrast. a decade ago most economists would say there is no mystery to why people pay what they pay. it's just rational people doing what rational people do. why is there any mystery to what we pay about things? >> i would say that in fact that promise has been proven wrong, that the idea of pure perfect rationality is in fact incorrect and there's all sorts of other things going on, psychological
9:02 pm
quirks, ingrained biases that we are not aware of the door kind of like deciding how we allocate our money and why we pay what we do. so for instance there is this great piece of research done by some six which is that the university of mexico who studied the pay to lap dancers -- >> host: this is probably the first time that lap dancing has been mentioned on c-span, so i think some sort of award or prize ought to be given for that. >> guest: there has to be a first for everything. but i found this amusing tips given to lap dancers at the peak of their fertility or much, much higher but substantially higher than lap dancers at any other point in the cycle and this was going on without anybody knowing. the patrons did not notice, but certainly something was happening to them, either it was a smell or the way the lap dancer moved or something that was leading them to pay more, to be willing to pay more for that experience, and so clearly this
9:03 pm
wasn't like some rational decision to pay more for this particular lap dance. >> host: this is falling into the realm of what is now called behavioral economics, "freakonomics," this greater appreciation for the rational feelings or sentinelle horse ecology. are you locating this book and that sort of tradition? >> guest: i am synthetic. i find behavioral economics fascinating, but the book is not quiet about our, you know, about these works. the book is mainly help prices steerer our decisions. sometimes gration, sometimes we make rational decisions we are going to do this rather than that. with every are going to get married, stay single, go to school or not. but sometimes there are always other variables we are not contemplating that come into our decisions and, you know, for instance, there are things just
9:04 pm
to go back to this idea of what we pay we do for a certain goods and services that are not necessarily rational i would point to the use of prices as a signal of value. this might be on the but it's still probably rational in the sense that you think you're getting the best you can for your money. when you buy a bottle of wine you think of $100 a bottle of wine is better than the $50 a bottle of wine just because it costs 100 not 50, right? and there's another interesting experiment done by psychologists at an i.t. which proved the point -- [inaudible] >> host: predictably irrational. >> guest: that's right. he did a experiment he gave students placebo pills that have no therapeutic value, but to one set of the students he told them the bill was worth $2.50 a pop and the others he told them they were worth 10 cents, and the group that got the more expensive placebo reported
9:05 pm
greater pain reduction than the guys that got the cheap hill so the price was playing some real function in their brain waves. >> host: you talk a lot about these types of studies and experiments and i do want to get into a lot of them, but before we do, one of the other i think promises that he focused on is the way that in the different societies, different geographic areas the decisions people make about what to pay for things or the value they put on things very briefly, and again, economists maybe 20 years ago would have told you things are universal. everybody, everywhere because they are rational economic actors regard similar activities and the price on them to a similar degree. not that they would pay the exact amount but they would think about it in similar ways. you have an interesting i think sort of personal and professional background that has given you sort of experience
9:06 pm
working with different cultures and viewing sort of first hand different types of prices and values people place on the things. can you talk about that? you know, your personal background. >> guest: i grew up in mexico city. i was born in the united states pilot when i was six. my mother was mexican and i grew up in mexico until i was -- until i left college and since then as a journalist who traveled to correspondent japan and in the united kingdom and i have been a journalist in brazil before returning to the united states to work so i have had an experience of how prices work in a different -- >> host: think back on some of the things that sort of stand out to you compared to take brazil for example. >> guest: when am i arrived in brazil i was arriving from the u.k. where i lived alone in a tiny apartment with a refrigerator about this size and of course i can only fit tiny little pines of milk. i arrived in brazil and my first experience going to the
9:07 pm
supermarket was you could only buy things in the enormous quantities. if i wanted oranges i had to buy a essentially a crate full, the same with potatoes and onions, milk only came in large containers, and the reason -- i didn't know at the time -- but on was arriving in brussels certainly after inflation had been more or less painful, but after years of really rampant inflation and hyperinflation and that people went and bought and spend their wage the minute they got it because if they waited a day it would be worth half as much so enormous family shopping expeditions on payday were the would basically by whatever, 100 oranges, 50 onions, 5 gallons of milk and spend their entire wages and so that led these retailers and companies to package everything in these enormous sizes and it's funny because i went back to brazil years later and you can see that now suddenly some of the sizes have come down because of the
9:08 pm
price. but i thought i was pretty funny. >> host: in the premise you write i think it is useful to look at the outset when writers are telling with their book is about. you say that the price we put on things, what we will treat for our lives or our refuse says a lot about who we are. and the central claim of your book is every choice we make is shaped by the prices of the options laid out before us. what we assess to be the root of cost measured against the benefits which again seem somewhat obvious but it works its way out of very different ways, and to lead by talking about garbage. and we have this free is one man's waist is another man's gold, and we know there is money to be made in recycling, and so you know, countercurrent to the way we treat garbage, but talk a little bit about the way you use this kind of differential attitude towards garbage and placed in different cultures and
9:09 pm
what that means. >> guest: one thing i mentioned in the price of everything is the idea of how our attitude to waste as a society will be a function of our development, and so i point to the fact that china might be a very dirty place today, but it's because the price that they pay for the added pollution kof the acid rain, all of the environmental consequences of this very fast, cold fuel the growth of that they are engaging in right now is at their stage of development was important, less relevant than providing jobs to millions and millions of farmers that are being displaced. so right now their calculation to the society is the pollution is worth it. now as they move up the environmental and the economic ladder, this choice will change because suddenly adding an extra job will not be as perfect for,
9:10 pm
you know, adding this extra chunk and they become a little bit more like us. >> host: you also talk about how we in the u.s. we pay people to take our garbage away and bury it somewhere and in other countries to pay even more and putting a high price causes people to maybe recycle more and then in some other places people will spend their days going through garbage in order -- it's a resource for them because they can feel they can mine it. >> guest: start with a hypothetical role in india making a living on a garbage dump and i think she doesn't realize that she is also trading away her health by living on garbage, it is a very lucrative slice, but it's what she has. so this is a trade that to her makes sense. she's making a living out of it. >> host: you can look at this from a diplomat perspective and say yes, this makes all the
9:11 pm
sense in the world. we have a lot of money, we don't like the unpleasantness of the garbage, we pay somebody to take it away. but there is obviously materials that can be extracted for recycling and reuse for somebody else that has a utility for somebody else, and in the world of trade we should be doing that. and of course larry summers, the former president of harvard, former white house economic adviser, got himself in a little bit of trouble by putting this out. what was that all about? >> guest: this was an deily 1990's. we were about to engage in the first world summit in rio de janeiro and mr. summers basically said that he signed his name to a memo. i'm not sure he actually wrote it physically to the chief economist at the world bank he signed this memo which suggested it made sense for the rich countries to export their garbage to poor countries and one of the arguments he said is that in poor countries exporting something that increasing as your odds of getting a profit by
9:12 pm
some tiny amount isn't going to matter that much when you are under five mortality rate is like one and 100 or ten and 100 this caused an enormous uproar but not because it was wrong. it was just it sounded -- is sounded bad. and i would also add that if we were all -- if we could sort of like discount corruption, this would be perhaps a better argument. but in some countries, some poor countries this kind of like attitude towards this easier attitude toward the garbage, this willingness to take on garbage, it doesn't really have to do with a social choice. it's not like the people of, you know, the poor country are deciding democratically that they want to make this trade. it's the regime that represented and so if you trust in the democratic profit of that regime it's fine. >> host: this also highlights something.
9:13 pm
you and i, you are not a trained -- you don't have a phd. >> guest: i am a physicist actually by training. >> host: i studied history and political science and we end up writing about economics and talking to a lot of economists. and they frequently expressed the have pretty strange world views sometimes as this larry summers memo in other words in his realm of thinking it makes perfect sense to think that way, and if you were a sociologists or a human, you would see this as a very strange way, and i think this is something that economists get themselves into trouble, but we have seen that our systems when we let economists who believe in this too much run things, federal reserve, housing markets, this often leads to issues because it's not simply about putting a price on something and letting markets work. there are so many other considerations that matter. do you think this continues to be a blind spot for many people in the economics profession?
9:14 pm
>> guest: yes. this blind spot is tops so they are meant to have this blind spot. and i think it spends -- i would say there are too big blind spots that want to jump out the most part this notion that price is always allocate resources efficiently. they are always right or we can't second-guess them. and to my mind what happened in the housing market is all you need to prove this is incorrect. the other one is this notion of utility that we all strive to maximize the kind of very narrow quantity that embodies our welfare in some way and this quantity doesn't count all sorts of things, you know, that are important for us like social connections and, you know, social norms that i think would work within an economic framework of the world, i don't think it's like it can't, it
9:15 pm
just doesn't. >> host: this notion that we are all fees missiles the door after the cheapest prices. ayman if that were the case, everybody would show that wal-mart and only at wal-mart and the would only apply exactly with the need to get through the day and we would seek the cheapest possible food and nutrition. if there was a poll that gave you the same nutrition as a salad bar or something else, we would go to that. obviously we don't. i found myself in a very sort of thinking with your passage on coffee because i have a very similar and complicated relationship to the devil's brew that you seem to. tell us a little bit about your complex feelings towards coffee and its consumption and how this gets into the mix of when you are writing about the >> guest: coffee is a hugely important substance to me as it is to you. eustis smoking way back when and
9:16 pm
so i joined a lot of it. i used to have -- not about this great coffee shop i had in my house in brooklyn run by these new zealanders who sold policies as well, very offbeat, cappuccino for $2.75 and i thought this was a steal and one of the best deals in white and i would go there every day and one day the increased the price to $3.50 and i was shocked. it's like what? this is 25% increase. this is a multiple of the inflation rate. how dare you, you are starting to look like some corporate cheeps your.
9:17 pm
the approach had to do it while i was framing the price. i was seeing the new price in terms of the gold price but it seemed to me as a ripoff and that led me to not just drink the coffee anymore. but then thinking about a little further but thinking about the new price wasn't all the expensive as the prices at any other coffee shop in the city. starbucks or, you know, other coffeeshops in my general community to work -- commute to work. so i looked at it in a different frame. the coffee was still better than anywhere else and was the more expensive, you know, i went back and drinking their coffee again. >> host: moly was on dunkin' donuts and espresso to make it
9:18 pm
home it is cheaper and quicker than the shop and it's a very efficient caffeine delivery vehicle. i'm surprised more economists don't drink espresso and exclusively espresso. so it is when you need to get through the day that when you are acquiring if you are not simply thinking about what is the cheapest and fastest way to do it. there's more to it sometimes you want to sit somewhere and paper or go to starbucks because they have wi-fi or standing up at an espresso bar and feeling like you are around people where you want to get away from your office and these are all things we tell you and you sort of put a price on that by saying okay, i'm going to pay $2.50 for that or a machine or 350. everybody has the wrong sort of utility is not this universal thing that you can define. it's what it means to every individual person. >> guest: that's exactly
9:19 pm
right. >> host: now one of the constructs is about the price of everything is that it assumes the account is their revolution to use the phrase markets are everything and which certainly seem to have a lot of time. what are some of the areas in which putting a price on things, creating markets and things house sold societal problems that you talk about. mr. it would be like energy, carbon use. it's a cost we impose on the environment that nobody pays for so we are basically destroying the environment, depleting the environment of the lack as it were and putting a price on this
9:20 pm
would go a long way in most reducing our emissions of this substance because a would just basically make it more expensive for us to burn fuel. >> host: we have seen this through other types of emissions, not carbon dioxide but the epa, the government has done this with mercury and other things and it seems to have worked to achieve its desired affect a relatively low-cost by placing a price on something that was sort of invisible all of a sudden a the becomes quite visible. now of course you could take this into interesting new directions and you could take it too far to take it for organ transplant. different countries are experimenting were dealing with it in different ways and then you talk about that. what are some of the different approaches? >> guest: i would say in most
9:21 pm
of the world's illegal to buy a kidney transplant and the country that i know that is illegal in iran and the reason people are thinking about this and in some countries thinking about making it illegal and in the united states listening the conditions for the way you cut pay for a kidney is there aren't enough kidneys to go around for all the people who need them. kidneys are a strange word in politically. in the 1970's for some reason i am not entirely sure why congress decided that every american who suffers from kidney failure was entitled to dialysis. dialysis keeps you alive for a year for $26,000 roughly so congress decided that if you had a kidney malfunction your years
9:22 pm
of life was worth of this much and they would pay no matter your age. one of the interesting things i found about it is if you had kidney malfunction paying for cervical cancer screenings would provide as much life for less money or giving antiretroviral drugs would actually be more cost-efficient as well but they didn't get the public largess was just kidneys. that is just a strange qualities kidneys have, but another problem if you have kidney ailment is there are very few kidneys up for transportation and so last time i looked the statistics said about ten people died a day in the united states within three to me for transplant and then a group of economists calculated gary becker and another economist at
9:23 pm
state university in new york who kind of crunched some numbers and they figured that paying about $15,000 per kidney offering to pay $15,000 per kidney would increase the supply of could transformation. >> host: in america? >> guest: in the united states. the way they reach the number is the use estimates for the value of life reviewed by the federal government in different ways and also you know, how much it would cost you to be x number of days in bed rather than going to work. so they kind of data that your cost and figure that for that kind of price people would be willing to donate a kidney and that would increase the supply of kidneys and reduce the death rate. so this puts to kind of important issues against each other to the desirable outcomes
9:24 pm
or not to one desirable outcome and one uncomfortable situation. if you could pay for kidneys we would have less people dying from kidney failure, but donating kidneys, selling kidneys strikes as unacceptable. it is the taboo that in my view i can't tell you i entirely understand but it poses some health risks. assuming we measure this correctly which is what he does they would be incorporated in the prize. >> host: of course when it comes to blood sperm or eggs which the body than can reproduce were perfectly comfortable with. being part of something, no? >> guest: gabus you can sell them for research purposes but not reproductive purposes. those are guidelines, this isn't law, those are medical guidelines because in fact biggs
9:25 pm
are sold but i would put in my view serving the military forces seek to take money to risk your entire life so that is an acceptable trade. you are taking to increase and the nets high year in her war and donating a kidney so this is what we find acceptable. >> host: you brought up something interesting which gets into your book which is the mention of putting price on the year of life and we would think that this is terri distasteful. how do you put a price on anybody's life on a day we are told of life is priceless? but of course we do this all the time and in fact we ourselves are continually putting a price, we decide how much life insurance we want to buy, how much we think we need and that is essentially putting a price on your life but the government also does this when they
9:26 pm
consider regulations. is it worth imposing a cost of the industry of $5 billion if it is only going to save x number of flights? and of course we have seen the 9/11 fun of the most wrenching example where somebody was tasked with looking at these people who were killed in this event how much they made, how many more years they have to live, and instead of saying each life was worth a million, came up with essentially 3,000 different answers. how does that type of thinking fit into your thesis? >> guest: if it's perfectly within the notion that everything has a price. it is actually perfect and the way that we calculate these prices is always going to be uncomfortable. i don't think we're ever going to find a way to value life bill
9:27 pm
we will be generally comfortable with. >> host: with 9/11 a was a function of how old to work and therefore how many years you had to work, but also what you had done to life up to that point. if you were a banker making 5 million a year versus a maintenance worker making 40,000 a year your life would be valued differently. >> guest: the principle is how much gdp, how much future gdp as the country lost because of your nonexistence? in a nutshell that is what it is so the way they do is you learn what ever, a million dollars a year because you are an anchor at counter fitzgerald and so you are -- or tables will tell me the you've got another 40 years to live. i add that up and so the rest of your life is worth -- >> host: it is entirely possible the banker would have been fired the next year and gone to work at a mcdonald's and
9:28 pm
that the person who was cleaning rooms may have been writing a screenplay and become the next j.k. rowling. >> guest: the more striking example is people who were not employed were considered not to have any economic w. because they were not making any money and so they only got what was considered them on economic value and that this was an arbitrary number commitment of $50,000 apiece. so they decided, pulled out of the air, and just to be sure there wasn't a mechanical kind algorithm. you had to work within the notion even though the congress passed it as an unlimited fund but they were trying to keep the overall amount relatively low and mr. feinberg was sensitive to the issue of inequality.
9:29 pm
he didn't want to replicate the inequity of life after death he knew there was a lot of negotiations people about no, he was worth 40 million. >> host: do you think this was a more just outcome than just saying if you were there you get x amount. >> guest: my preference just in terms of the justice is exactly that. if you dhaka this is an enormous cost to all of us and you are all worth of the same but a part of the purpose of the fund is to stop losses against the airline, and so they knew feinberg and congress knew that if they did this they would get sued, the fund wouldn't serve its purpose to avoid lawsuits, so there'd be tons of lawsuits out there so that is why i think they were forced to do it this way but still the highest payment if i recall correctly was more than
9:30 pm
$6 million said to have investment bankers that made that in a year. that not everybody took the deal. there were some high-income folks who sued and they got a higher payment on average, but at the end of the day they were worse off because out of the payment had to pay legal fees. >> host: we are going to take a break and then pick up the conversation.
9:31 pm
"after words" with eduardo porter and daniel gros continues. >> host: so much of the book and so much for economic life is about putting prices on things and placing a monetary value and judging success or failure on that. you write about not every country in the world is sort of down with that. there are some people looking for alternate ways of looking at economic success that don't just involve money. what are some of those and do they have any utility? >> guest: let's put it in terms of measures of well-being or welfare which at the end of the day is what we should strive for in a society. so there are other things
9:32 pm
besides money that produce this welfare, and one very clear sully and one is free time. so there are countries that have made different trade-offs in the united states. the united states is a country where working hours of increased over time, vacation time has decreased, we work more than most other industrialized countries and this wasn't always so in fact japan 20 years ago worked more than americans and now they work less. and this has led to actually how your economic growth the united states is the richest country in the world today. but some of these other countries are actively when you ask them how they feel about their life they seem to be an equal or better shape than the united states and so for instance the french, but they report like fairly high levels of satisfaction with their life and one of the reasons is they have enormous amount of time to
9:33 pm
engage in all sorts of things light having long plunges. >> host: and trying to sort of genetic tests to the economists to come up with a full-time duty to measure which strike me as changing the rules. >> guest: that is a little bit of was going on now. >> host: but there is still quite a global seniors they are pretty darn reach. it's not like they're sort of making some excuse for not having stuff. but what is the himalayan country? >> guest: in baton the king whose name is kind of difficult to pronounced and i cannot remember came up with the notion that they should measure the growth national happiness and they actually spent years in devising their happiness index which they would use as we use gdp to determine economic success they would use their index to determine the success
9:34 pm
of their policies. >> host: have you been to china? >> guest: i have. >> host: what struck me is the sheer focus on economic data and economic growth to the exclusion of everything. you go to any provincial town use it on of the local officials and the first thing they talk about is the gdp was up, our towns gdp was up 6% last year, and of course a very poor country. they feel the need to have this growth for the sake of development but also the sake of their political system. but true society is there a tipping point where a society we have come far enough and we can start judging our progress by things other than the amount of output we are creating every year? >> guest: let me start by saying i think that gdp is a really good indicator of progress and the fact that it's
9:35 pm
kind of like easy to measure, easy to compare across the world. it's fairly objective and the things that go into it are fairly uncontroversial whereas the index of happiness in bhutan have some things that are not perhaps evidently great for all of us, so one of the things in this index is what are you engaged in consisting cracking your school against somebody else so if you did this more you're supposed to be happier. so i would question that investment and also the point here is this in a false such an alternative index of well-being requires a level of archer reid decision making. this makes you happy and this not. postgrad the, in any of experience with their 500 different games or in the gulf makes them happy or tennis and we will decide our country's loveless caviness based on how many levels of schools are paid.
9:36 pm
>> guest: that's right. and in baton specifically there has been a decline in the practice of all of these traditional sports but in the index of happiness but i wouldn't say that is because -- that makes people unhappy. it's because the preferences are involved. or maybe soccer has become prevalent in bataan. i don't know. the evolution of preference is changing in a way that these other kind of ad hoc measures wouldn't really captures very well. so just to say i think gdp is not a bad measure it's just it doesn't encompass everything. >> host: one of the more fascinating sections of the book has to do with women, and i think it's very interesting set of observations this is i think today to be writing about the global economy you have to be as much an anthropologist as anything else because it is really you encounter a vastly different social systems and experiences that then play themselves out in a way that
9:37 pm
these economies are constructed and in the way things are priced. talk a little bit about sort of polygamy impact and what that says about women in those societies and also a little bit about india, china, korea. >> guest: perhaps the basic starting point is family, the marriage is an economic transaction. we tend to think of it as going by love, but no contract there are trade-offs and -- >> host: we've known this in new york city because you're at lease is coming up, where are you going to move next, the rest of america maybe not so much what new york for sure. >> guest: into the family is an economic unit where the hudson and the wife pay and they're very specific assets and
9:38 pm
characteristics into this detriment to produce kids which is the ultimate goal and so this little factory where the women put eggs and child care and the men put sperm and substance from the outside the office or the field or whatever there have been many institutional arrangements throughout history that have contributed that have allowed the factory to function, and one of them is polygamy. >> host: polygamous societies which there are still a fair number around, the women are a comparatively scarce resource, hence more highly valued. >> guest: that's right. i find the counter intuitive notion people might think that the women are worse off but in fact it's not necessarily so. i find this great quote by an anthropologist who says he
9:39 pm
wouldn't rather be robert kennedy's first wife than the third. robert kennedy's third then the first comes a that's right, women have more of a shot of getting the high quality kneal and the polygamous society and that is their objective given that they are going to invest a lot of energy and time of the production because just carrying -- >> host: it also works the other way that in those societies the prestige measured by the number of wall that you have that powerful the wealthy man and the economic transaction they are sort of competing for the women to a degree. >> guest: their objective not just in terms of prestige that their objective is to maximize passage of their jeans under the next generation and if they have like a handful of wives began at a handful of kids and this genetic perspective, but the
9:40 pm
thing is it doesn't work for all it works for the powerful and that is why i think that this institutional institution proved unstable. i think there are two reasons economists have looked at. one is in polygamous societies it is common for the men to pay for women because they are a relatively scarce resource, and so they are more common than in a monogamous societies and polygamous societies. and so this kind of sucks the resources into marriage that could be used productively it have the parts of the economy and also lead to more childbearing. polygamous societies tend to have more kids and so these two things are seen to have worked against the economic, but the other more interesting reason here is it didn't work for and on wealthy man, so you have the wealthy, the rich, the kings, would ever, having enormous numbers, but you have the poor with no chance to reproduce and
9:41 pm
this creates a sustained society most of the treatment of the women in the two biggest countries in the world, india and china is a completely different story and in which economics, technology and social control have led to a pretty bad outcome. i mean what has happened in india and china? >> guest: i think there are similarities and important differences as well. i think the root cause is the women have very little value. >> host: even as the economies are growing industry and industrializing and getting all the technology and becoming source of innovation still -- >> guest: what i would say is in the future this will probably
9:42 pm
lead as to princeton china and you see a great movement of women into the workforce, a lot of the women working in the industrial, a lot of the work, so that we think ultimately increase the value in society and also increase the value within their family and so these things might change but as it stands today in these countries, the women have very little value and this comes from a long tradition and because the of only been a valued at essentially the aarsele very traditional society and the women didn't work outside the household and so the value was -- >> host: there is a cost for the parents because they have to sort of pay -- >> guest: and you have to get married, so you have to invest in the pay for that and over india the dowry payments can amount to several years with a family's income, so this is not just like junk change. >> host: what you have in both of those countries is what
9:43 pm
typically the caribbean equal number of boys and girls born in growing up to maturity and in both of those countries there's a pretty significant match that isn't random. >> guest: it's the most all of consequence of this dynamic that families are deciding to abort the female fetuses or even kill baby girls after birth and so you have this enormous mismatch. if i remember correctly the chinese academy of science estimated that by 2020 there will be something like 25 million men of marriageable age without a bright because of the difference in fertility. poster and at that point should have a -- >> guest: he would think that women will be extremely valuable. in fact at the end of the
9:44 pm
chapter the price of when and, i refer to this piece in "the wall street journal" a couple of years ago about women going from town to town and demanding a bride price and then, you know, leaving the groom's kind of like waiting at the altar and so this could become a little business opportunity, but this points to -- >> host: the julia roberts movie runaway bride. >> guest: it adds economic incentive to that movie. >> host: one of the interesting and paradoxical issues is the fact one of the most powerful prices these days is no price at all, free. chris anderson did this book about how the future of the many businesses and giving away your product for free is giving consumer offtake and then you can solve other things but these
9:45 pm
are good case studies particularly for entertainment and music in which people are discovering that essentially devaluing your own product, the work to do and giving it away, somehow it becomes a viable economic strategy. and as a writer who is accustomed to getting paid for his articles and books strikes me as someone said the way to sell a lot of books is just to give the whole thing away. i would tell my publisher that they are more in city in the unusual. how does this work? >> guest: well, the argument in the price of free is that this is wrong. i disagree with the premise of getting your content away, and then i think that we have substantial proof through history and the argument that giving your content away will work as some sort of a marketing which will allow you to create a
9:46 pm
reward in some other, you know, domain and giving away your cd will allow you to take more money in concert. >> host: i should let you know we are not getting paid for this. >> guest: that's true. [laughter] i think there is very little empirical evidence to support that claim, and you mentioned some of the specifics of apples that i use and 1i really thought was kind of pretty much to the point is this idea that retial head and 9-inch nails -- >> host: these are music groups. >> guest: yeah, they're getting the music the way for free, actively putting it on line and allow when their fans to pay whatever they wanted. this is what radio hit it, pay whatever you want, and 9-inch nails did a little bit different. they gave one part of its music for free, and another -- a lot of music page less for low or call the download. but anyway, it basically allowed
9:47 pm
people to get the music without paying and they made a lot of money by than selling and a hobby and a version with a t-shirt and a final album and a little book or whatever and the actually made a lot of money and the album itself sold, but these are very famous actors that have an enormous following. there are people who will give an arm. but then this was tried by women who were quite good, i like the music, and he is a friend of 9-inch nails who produced this album for him and tried to market and sell it in the same sort of way which was they put it on line and there was a high quality version that cost $5 low quality that was available for free, and in fact almost nobody was willing to pay, like 25,000 people were willing to pay which gave him $125,000 an album which
9:48 pm
is not enough for him to make a living making music. >> host: and this highlight something else you get out which is the superstar effect that we live in this world where the rules just seem to be different for people who are where the fans as well known they can plug into these types of technologies and networks and get something out of it that sort of mere mortals can't. whether that's, i don't know, twitter, one of the kardashians, she gets paid to tweet because she has many followers she says i like this product, she will get -- she will charge. where is i have my 3600 twitter followers and a lot to tell them what a great coffeemaker i have the will say that's very nice but we are not going to pay you for that. this highlights a larger thing that explains why, as you a test in the book that the greatest
9:49 pm
soccer player in the world in the 50's and 60's $8,150,000 a year in his present dollars, and david beckham, who is quite good but not transcendent anymore it's a gigantic multiple of that. why does society or markers put a different price on superstars today than they did 20, 30, 40 years ago? >> guest: to go to that example, it is basically because david beckham is seen by hundreds of millions of people who can like him and follow him and follow his pleading and look at him where he wears a logo of a certain sports brand whereas the other is seen by a small group of people so for all his greatness, you know, you say nobody will pay for 36,000 viewers -- rose to 3600. this could that would be nice.
9:50 pm
3600 twitter flowers. welcome he lived in a jury small universe. i mean, television was in the popular in brazil. there was only like a few hundred thousand tvs in brazil at the time comes of the commercial satellite wasn't yet available when he got big so he couldn't sell stuff to the world as david beckham can. some football games would have everybody pa outdoor products so he was worth much less and can see this not only in football, you can see this across sports, across entertainment, and just to go back to the retial hid versus williams comparison there is work done by an economist alex krueger of princeton who found their share of concert revenue taken by the top artists was growing immensely since a 20 years ago the share of the top 10% of artists was like 30% of
9:51 pm
all concert revenue. by the mid 2000 it was like 57%. so, this is a please migration of my spending on entered into the top act, and the reason i do it is because i can. right now that comes to me wherever i am in the world. host could you talk about the price of faith not so much about the fee to pay to belong to a religious group, but about some of the economic implications of things and this is something i don't think it is controversial because from max weaver and the protestant capitalist or get sick this is something every social studies has been taught to believe there is something about protestants that is what to capitalism in europe compared to the catholic church and the
9:52 pm
was brought to the u.s. and these sorts of values lead to more economic growth or the believe in -- there's a connection between capitalism. but of course now capitalism has really become on bottled and uncorked. countries like brazil and countries like india, countries with no official relations at china seemed to be embracing that. but what do we -- what do we know about the price of faith, the price that sort of extracts or adds to economic growth? >> guest: my basic argument here again is that choosing to belong to a faith has the call the qualities of an economic transaction as well so we believe that we think that we believe in a superior broad
9:53 pm
because he preexists, but in fact many of the reasons we join a religion is because the benefits we derive from joining it here on earth and not in the afterlife and for that we are willing to pay for certain price and this price can be measured in money would be part of the price of joining but oftentimes going to church in behavior, not doing certain things, not eating certain things, and so it is perhaps like a country club membership or, you know, being part of a biker gang. if you are paying in terms of sacrifice because these payments that you make when you are joining the face are mostly in sacrifices and things you are not allowed to do to belong to this group and why this is so is because of these sacrifices that ensure only the most devoted will belong to the group because only they will be willing to take the sacrifices and the more
9:54 pm
devoted the membership of the club, the higher the benefit for all the members. so for instance one of the benefits if it is religion it is insurance. there are lots of mutual help going on within parishes and one study of what happened after the tsunami hit indonesia and there was a sharp rise in the form of collective prayer so people started to joining the engaging groups and one of the reasons is these groups served as kind of like self-help organizations and so people could get some kind of economic assistance so there would be a clear benefit that you get but there are others less immediately tangible and surveys religious people report better health, more happiness and in fact some have suggested longer life span and this comes from a sense of belonging, social cohesion and so forth.
9:55 pm
>> host: you talk about your pricing faith which is something we cannot see or touch, something else we can't see or touch is the future and you're right we are all paying a price on the future in different ways beyond by being an annuity or saving for retirement. what do you mean by that? >> guest: we are engaging in activities that will cost us down the road. in 50 years, 100 years, and by this i mean he essentially the consumption of fossil fuels, the emission of carbon into the atmosphere and that would impose a cost on our environment and the economy 50 or 100 years down the road, or perhaps even sooner. so we are imposing a cost on the future and right now we are faced with the question how much are you willing to pay today to avoid the teacher cost?
9:56 pm
so what is the price which you would save the future? and this is an extremely difficult question to answer and that is perhaps why, juneau, their use so little movement in the area of an agreement to curb global warming. >> host: one of the things i'd personally interesting is the price of media and the different prices people are willing to or are not willing to pay for the same media and every time we publish something it offers a sort of case study. the readers could pay $2 to get "the new york times" to read one of your editorials. they could be paying more than that so that they get it delivered every morning. they could be reading it for free online. they could be going to a library pay phone line.
9:57 pm
when we see different people they may not even be aware it is a force of habit i subscribe because i have always subscribe it but we who are producers of the media are also consumers, and i and as serious about your consumption and payment for the media. is that something that you think about when you are spending a lot of time out or watching tv, are you aware i am paying for this cable? i'm not paying to read or this is something i go out of my way to pay for? >> guest: from my own experience i pay for a lot of media that i do not consume in the form of cable television, which i feel very little of. i pay for some of the media i do consume. i pay for "the new york times" and presumably "the new york times" pays for the other subscriptions i get in the office. but i also consume a lot of media that comes to me for free because i have my computer turned on all day and i am on the internet for hours and hours
9:58 pm
a day and there i am receiving the volatile information to me for really nothing. and so i realize -- >> host: of course if you are not paying for it you are the product. in other words what is being sold is your eyeball -- >> guest: that is entirely true. when you're watching broadcast television you are paying per hour, 18 minutes in time and that's why broadcast tv had such a problem with tivo or cable tv with tivo because it allows you to the race the ads and if you the race the ads the business model falls apart, but yes, you are paying in time. >> host: i think it is a strange thing as we go through our lives there are certain magazines i subscribe to that i would gladly pay for the i don't read it that frequently. but i don't sit around and think i wasted that $20 that so much of what you see on line is for
9:59 pm
free you just take for granted this for free and if they ask you to pay 50 cents to read it you would be like no it's not worth it to me. how much is the bookselling for? >> guest: it changes every day. you go on amazon one day and will give you a price and you go on and on another day and will get a price so i think they have some algorithm there that change in terms of the link to manage the prissies out there -- >> host: and this is available as an ebook and a different price for that. >> guest: yes. >> host: it could be an audio book, it could be sold as an iphone application. >> guest: that would make me very happy. >> host: in english but in the u.k. or canada or australia each would have a different price, and of course people could go to a library and check out which has its own cost. >> guest: do have to go there and spend some time and get a an


info Stream Only

Uploaded by TV Archive on